Digital Outsourcing Write For Us

Digital Outsourcing Write For Us

Digital Outsourcing Write For Us

Companies that did digital outsourcing or subcontracting did so solely to save money. No more than 20 years ago, technology optimized processes by automating tasks. But today, it is different. To write for us, you can send us an email at contact@techwadia.com

Companies can already, and smarter ones are doing, outsource to capitalize on more sophisticated benefits. These include custom industry solutions, increasingly advanced artificial intelligence, analytics, and machine learning.

With the landscape of recent years, it is clear that outsourcing is on the rise thanks to all its advantages and its evolution to fully digitized operations through business process management (BPM).

Table of Contents

The rapid growth of digital outsourcing

Companies worldwide spend 230 billion dollars in business process management, from customer service to administrative processing in claims, payments, acquisitions, etc. And although outsourcing still represents only a small part of the budget, it is projected to overgrow.

According to McKinsey, A detailed analysis of 53 business process outsourcing deals (more than 200 transactions) that closed between 2016 and 2020 shows that sales nearly doubled in the five years.

Companies have several reasons to explain the rapid growth in the digitization of BPM (Good Manufacturing Practices) agreements:

It demands digital products and services.
The global adoption of cloud technologies across all industries.
Cloud platforms and services allow the adoption of more digital and data technologies.
Digital outsourcing produces high-quality results. Incorporating digital into an outsourcing contract can generate two to three times the impact of traditional models and improve the experience for buyers and their customers.

Challenges presented

However, despite its growth, digital outsourcing also faces different challenges. These are some:

Get executive support

Digital sourcing programs require a high level of aspiration from the director of procurement and other senior leaders. They are key to being in sync, supervising, and focusing on digitization.

Organizational inertia, carefully constructed relationships, and an understandable desire for stability can lead purchasing teams to stick with current suppliers. Furthermore, digital sourcing is a new supplier and way of working with all suppliers.

Weak supply capacity

Some organizations may not have the internal capabilities to pursue next-generation digital service providers. Doing so requires a different business case based on results and innovation rather than direct cost savings. Furthermore, this digital evolution also means a shared responsibility.

In addition, sourcing processes need to increasingly incorporate digitization and automation, a marked improvement from the current, largely manual processes that remain in place in many organizations today.

In other words, to access digital from external providers more effectively, companies need stronger internal digital use skills.

And while it may take time, the payoff for implementing these processes is clear.

Four success factors for digital outsourcing

According to a McKinsey analysis of the outsourcing landscape, there are four critical elements to your success:

A focus on transforming operations through digital

The traditional approach to outsourcing had a well-defined set of tasks on the company’s part, and vendors were paid based on a fixed rate for time and materials. However, digital outsourcing seeks to radically transform operations, with providers taking on more complex processes and getting paid based on the result they deliver and the solutions they implement.

Shared incentives aligned to innovation

Companies can structure agreements to incentivize innovation throughout the contract term through arrangements such as profit sharing. Ideally, the innovation agenda aligns with the organization’s priorities and covers all dimensions: efficiency, effectiveness, and expertise.

Redesigning digital journeys from start to finish

Companies can no longer outsource a single-piece meal portion of a process and expect a huge improvement. The provider typically needs to own and transform the entire end-to-end process through streamlining, digitizing, automating, and eliminating manual labor and operations for a big impact. Over time, this broadened perspective helps build a broader continuous improvement mindset, allowing the supplier and buyer to collaborate to generate more value as the business and technology landscapes evolve.

Joint responsibility for digital transformation and adoption

Instead of the hands-off agreements of the past, where a company and provider often worked at arm’s length, digital sourcing requires a joint governance structure. Dedicated teams with representatives from both monitor and organizations develop—KPIs, including customer experience. Vendors must be empowered to make decisions independently and coordinate more closely as partners in areas like technology stack access or identifying CIO data loss concerns.